Friday, June 10, 2022

Continental again calls on Fifth Circuit to revive federal antitrust claims against Avanci, Nokia, others over contract claims under state law that Judge Lynn declined to entertain: waste of time

Automotive supplier Continental should finally come to terms with the strategic mistakes it has made all throughout its antitrust campaign against Avanci and several of its licensors (Nokia, which is Conti's primary target, but also Sharp and Optis). It pursued U.S. litigation that has underwhelmed all five federal judges who have looked at it so far (Judge Koh, then in the Northern District of California, now on the Ninth Circuit; Chief Judge Lynn in the Northern District of Texas; and a panel of three Fifth Circuit judges). It urged the European Commission to investigate Nokia's licensing policy--in vain. If anything might have yielded a result, it would have been a Huawei-style private antitrust lawsuit in Dusseldorf, but the window of opportunity for that seems closed by now.

Conti is digging itself an ever deeper and bigger hole. It keeps throwing good money after bad, presumably due to a lack of in-house expertise. The latest specimen of Conti's desperate tilting at windmills was filed on Thursday--three days after Avanci, Nokia, and their co-defendants filed a strong reply to Conti's petition for a rehearing en banc by the Fifth Circuit that simply explains Conti can't win the case even if a review were to result in the requested modification of the panel decision.

Conti should be grateful to the Fifth Circuit that the court had asked Avanci to respond to Conti's petition. But the idea is not that there is extensive back-and-forth briefing. Conti, however, has requested permission to file the following reply brief in support of its petition:

Conti accuses Avanci and its co-defendants of "misstat[ing] the contents of Continental's petition," a petition that Conti says "demonstrates that the panel decision conflicts with Supreme Court precedent holding that a party has standing to sue when its rights under a contract have been violated." (emphasis added)

There are two reasons--any single one of which is sufficient--why that argument doesn't warrant a rehearing:

  • The panel opinion said that "even if Continental has rights under FRAND contracts, the contracts have not been breached because the SEP holders have fulfilled their obligations to the SSOs with respect to Continental." In other words, it's irrelevant whether or not Conti is the victim (it certainly has a propensity for victimization) of a breach of contract, because its customers (such as Daimler and Ford, in whose infringement cases in Germany Conti intervened without being able to prevent them from taking an Avanci license) have not been affected by a breach of contract.

  • Another way to look at it is that the contract law claims are not in the case at this stage. The Fifth Circuit panel only had Conti's federal antitrust claims before it, and that's yet another reason why it doesn't matter whether the Supreme Court sets a low bar for the standing of those claiming to have contractual rights.

    Let's recall the final sentence of Judge Lynn's dismissal of Conti's complaint:

    "Given that all of Plaintiff’s federal question claims have been dismissed, the Court declines to exercise supplemental jurisdiction over Plaintiff’s remaining declaratory judgment, breach of contract, promissory estoppel, and unfair competition claims [all previous emphases added], and it is FURTHER ORDERED [emphasis in original] that these claims are DISMISSED [emphasis in original] for lack of subject matter jurisdiction."

    Conti didn't--as it couldn't--appeal Judge Lynn's decision to exercise her discretion to the effect of not entertaining Conti's breach-of-contract and various other claims under state law. The Supreme Court precedent Conti cites doesn't deprive the district court of its discretion to decline to hear orphan claims under state law that would only have played a role if Conti's federal antitrust claims had survived.

    Put another way, Conti wants to bring back an "antitrust" case to life by relying on contract law, when its contract claims are clearly and indisputably dead as a result of the dismissal of Conti's federal claims.

    By the way, Conti--during the pendency of this appeal-brought some state law claims against Nokia in Delaware state court...

Given how easy it just was for me to identify the deficiencies of Conti's latest argument, I'm not sure that Conti increased the likelihood of its petition being granted. Conti's only chance here is that some circuit judges may be impressed by those amicus briefs, which are simply part of a broadbased SEP devaluation effort that involves astroturfing and other deceptive advocacy tactics. If the question is whether Conti's petition for a rehearing has the potential to change anything about the dismissal of a fatally and fundamentally deficient case, the answer is no. That is separate from the noise made by automotive companies and "Apploturfers." Noise is not a substitute for logic.

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